How to listen to HRC’s big economics speech tomorrow

July 12th, 2015 at 12:01 pm

Ariel[about Leopold] He taught me a lot…
Andrew: Like what?
Ariel: Like how to listen to Mozart.
Andrew: With your ears, right?

–from Woody Allen’s “A Midsummer Night’s Sex Comedy”

Hillary Clinton is poised to give an important speech tomorrow (Monday) explaining her diagnosis and prescriptions on the U.S. economy, with a focus on wage stagnation and the persistent gap between overall growth and the prosperity of low- and middle-income families.

Their staff briefed a bunch of us DC types, and I can confidently assert that this is a speech worthy of your attention. The argument is organized around the principle that sustainable growth is essential but there’s no reason to expect it reach the middle class. She then articulates what I would call a reconnection agenda—a policy architecture designed to reconnect growth and more broadly shared prosperity—which focuses on:

–reducing labor-force-entry barriers for women by expanding child care and paid leave;
–investment in physical and human capital as well as clean energy;
–updated labor standards, including OT and minimum wages;
–ideas to incent more patient capital, fewer share buybacks, less short-termism in investment;
–more profit sharing.

All good, mostly familiar ideas, though the last two bullets are welcome additions to the usual fare in this space. And I particularly like the contrast between growth alone and growth + reconnection policies. Too often, the diagnosis I hear from politicians on the right is that sure, there’s too much inequality in the economy, and that’s why we need faster growth. That, of course, assumes away the very core of the inequality problem. As productivity growth continues to diverge from median and low pay, why should we believe that the answer is simply more productivity growth?

In fact, such growth is necessary, but in our era of such heightened inequality, it is far from sufficient.

But that’s actually not what I’m here to talk about this lovely morning, as I contemplate all this on my back porch next to a snoozing fat, black cat. I’m here to examine, if not pre-empt, some of the analysis that I expect to follow the speech.

Basically, the tendency of many of us paying attention to these policy matters right now is to scrutinize the details of these types of ideas, and to do so in the context of today’s political realities. Will they work? How could she (or Bernie, for that matter) get them past a hostile Congress? What are the “payfors”? Does the agenda differ sufficiently from Obama’s?

These are reasonable and important questions and I fault no one, myself included, for asking and trying to answer them. But I don’t think they are as fundamental as they might sound, and not just because it’s still early days.

Instead, there are two things that matter above all else. First, what is the candidate’s broad diagnosis and prescriptions, as discussed above. And second, will he or she, as president, join the fight with the necessary energy and conviction.

Once you get the first part right—diagnosis and policy prescriptions—your strategy regarding gridlocked politics or how your ideas are different than someone else’s may matter less to the electorate than your ability to convince the people you’re targeting—the middle class households for whom growth has heretofore been a spectator sport—that you’ve truly got their back.

It is less important to explain how you’d capitalize an infrastructure bank than why it’s so important to invest in the public sector, how critical it is to have an amply funded, functional federal government. Even more so, how you as president, will fight your a__ off on behalf of those who depend on full employment, quality public goods, the safety net, the breaking down of barriers to mobility that inequality has erected.

These days, I’m listening less for nuanced differences between your agenda and Obama’s, and more for the FDR spirit (paraphrasing): “I’ve got some ideas on how to close this glaring disconnect between middle-class prosperity and growth. Of course, I think they’ll work. But if they don’t, or if politics blocks them, I guarantee you that I’ll keep trying until the fortunes of the middle class are once again rising with the rest of the economy.”

“I know how hard this will be. I know well the depth of the resources of the powerful who will try to block me from pursuing this reconnection—I know how deeply they’re motivated to keep growth flowing exclusively their way. And I won’t stop fighting them until the balance of power, wealth, and paychecks is restored.”

I’m no pollster, but my gut tells me that this is what people need to hear in their ears and feel in their guts along with the details of your policy framework. The latter, by itself, like growth, is necessary but insufficient.

Update: read the deep, well-organized thoughts of Max Sawicky on all of the above; he’s less sanguine than I, though you have to jump higher to clear his bar than mine. And while he threatens my cat, through a proxy, his dog looks to sweet to do much damage.


Snoozing cat, thoroughly uninterested in all of the above.


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9 comments in reply to "How to listen to HRC’s big economics speech tomorrow"

  1. Peter K. says:

    This is a million times better than Jeb!’s longer hours for workers – lolwut? – but still weak team from my perspective. At least she is focusing on wage gains rather than growth. For me the key is a high-pressured full employment economy which means a high-pressured monetary-fiscal-trade mix. If it isn’t high pressured enough you get loose labor markets and no wage gains.

    Say she “invests” in human and physical capital. The Fed could compensate for the increased government spending and raise rates higher than they would have otherwise been. We need higher than target inflation and more focus on labor and wage gains than on growth or profits.

    Her husband depended on the Fed to keep rates low to spur investment in exchange for deregulation and balanced budgets. It didn’t work to create a sustainable economy with wage gains. We got a Tech bubble which morphed into a housing bubble and disappointing recoveries.

  2. Tammy says:

    Is that a marijuana plant I see growing in the background? No, I am playing and praying for my investment in higher education to pay off. I hope HRC discusses the 300% increase on a long term investment that, with our current market, isn’t worth the risk for adults who have followed the Obama administrations cue to “retool.”

    • Jared Bernstein says:

      Bamboo! To feed my pet pandas.

      • Tammy says:

        You have a good sense of humor and I appreciate that. Pandas are an endangered species in South China. I hope Hilary Clinton addresses her position on China’s economy. I am pro China and said, “I’d like to see China become a leader… .” Reflecting I should have utilizing the word partner thinking about the global economy.

  3. Charles Van Wey says:

    Has she ever heard of unions? Labor is a critical part of the political infrastructure for progressives that has been bashed, ignored, and then bashed some more by both parties. Remember EFCA? Does she?

    What kind of people has she selected to advise her on economic matters? These things matter much more than what she says. She’ll say anything.

    • Jared Bernstein says:

      My mistake to leave that out. I expect to hear references to the importance of collective bargaining.

  4. Jill SH says:

    I saw the header and thought to myself “profit sharing profit sharing pleeeeeze”. And lo and behold you/she do not disappoint.

    Funny how you haven’t heard much of that since unions went off the screen…

    I’ll listen tomorrow with all ears open. And my heart, too.

  5. Kenneth D. Franks says:

    I continue to enjoy your posts and agree with many of them. As you explain economics much better than I ever could, I have a link to your blog from mine, which mostly has been focused toward Texas political issues. I agree, the collective bargaining issue needs to be addressed.

  6. Tammy says:

    I hope you are going to share your insight, Jared Bernstein, re Hilary Clinton’s speech at the New School on an economic agenda.

    I mean no disrespect, and I do realize there is a trade off for a politician severing the common good. Maybe Clinton would have better worded what we know about childhood brain development in early infancy years, whether one is a working parent or not (what a brainless statement “working parent or not” – no?). It is a delight to speak, read, and sing with a child and not an embarrassment. Yes, parenting is exhausting. Nevertheless, it is a joy.